Residential water heaters are used primarily to provide hot water to residences for consumer use, appliances, and other functions. Water can be heated by electricity, gas, or oil. There are two main types of water heaters: typical heater/storage units and instantaneous water heaters.
DOE published a final rule for amended standards for residential water heaters on April 16, 2010, which went into effect in April 2015. The required energy factor (EF) varies depending on the type of water heater and the rated storage volume. For gas-fired and electric storage water heaters with a volume greater than 55 gallons, the standards effectively require heat pumps for electric storage products and condensing technology for gas storage products. According to the DOE, the standard will save 2.6 quads of energy over 30 years or about enough energy to meet the total energy needs of about 13 million typical U.S. households for one year. Over the same 30-year period, consumers will save about $8.7 billion and carbon dioxide emissions will be cut by 154 million metric tons.
Water heating represents 20% percent of total annual household energy consumption in the U.S. About 53% of U.S. households use natural gas water heaters, while 38% use electric and less than 4% use oil. According to DOE, a baseline .90 EF electric water heater consumes around 2,700 kWh annually. Though electric water heaters are rated with higher energy factors than gas or oil, these ratings do not account for the fact that about 3 Btus of fuel need to be burned to generate 1 Btu of electricity. All water heaters generally waste a portion of fuel they use to keep storage water heated: for example, in a conventional gas water heater, only 43% of the fuel energy actually reaches the point of use. The remaining 57% dissipates through standby losses, distribution losses, or combustion losses. Thicker tank insulation can increase the efficiency of all types of water heaters, but this has decreasing gains at higher efficiency levels, which already have relatively thick insulation. There is not much potential for additional efficiency gains for conventional gas and electric storage water heaters. However, heat pumps can decrease energy use by about 50% compared to electric storage water heaters while condensing gas water heaters can reduce energy consumption by about 25% compared to conventional gas storage products.